Is Amazon a monopoly that needs to be broken up?

British_monopoly

Imagine a store whose clientele is not one city but the entire country, if not the world.  And that sells nearly everything–books, electronics, clothing, toys, food.  That is what Amazon.com has become.  Does that constitute a monopoly?

Corporations in a free market often grow until they become monopolies, whereupon the free market ceases to function because there is no longer any competition.  At that point, according to economic theory and government policy, they need to be broken up, so competitive forces can click in again so that the free market functions.

Has Amazon.com reached that state?  Does Amazon.com need to be broken up?

Normally, monopolies, by eliminating competition, raise prices.  But Amazon’s dominance is lowering prices!  Also, Amazon works by giving manufacturers and publishers (including self-publishers) access to customers, providing consumer information about their products and offering inexpensive shipping.  So maybe it’s more like infrastructure.

Economist Douglas Rushkoff, in the article linked after the jump, says that Amazon.com represents a different kind of monopoly in a different kind of free market than that of the industrial revolution.  But he concludes that it is important that Amazon be broken up.

What do you think? [Read more…]

Amazon will buy Whole Foods

Whole_Foods_Markham_Canada

Amazon.com has announced that it is buying the Whole Foods grocery chain for $13.7 billion.

Commenters are saying that this will help Amazon.com sell groceries on-line.  At the news the stock of traditional grocery stores, including Costco, have plummeted.

But the draw of Whole Foods its organic offerings and the attractive atmosphere of the store?  I don’t know that Whole Foods–with its high prices and its high social status–would work if customers shopped privately without the social dimension of shopping.

Maybe Amazon will keep the bricks-and-mortar concept, but Whole Foods has been losing money and its new owners are probably planning a technological solution.

Would you buy groceries on Amazon?  Would you ever come to the point of never going shopping for anything, just having everything delivered?  Wouldn’t you sometimes want to leave your house? [Read more…]

What to do with your Amazon boxes 

If you or people who gave you presents did much of your Christmas shopping online, you will accumulate lots of Amazon boxes.  Don’t throw them away!  Amazon has partnered with Goodwill for an ingenious program.

Save the box.  Then fill it with something you would like to donate to Goodwill.  Go to GiveBackBox.com, where you can print a label that will give you free shipping!  Then put the box in the mail or give it to UPS.

Do you see the beauty of this?  When you get “stuff,” you will be able to also get rid of “stuff.”   Instead of just accumulating more and more possessions that fill your home and bury you under their material volume, this can help you perhaps keep on more of an even keel.  Also, of course and most importantly, you are helping those served by Goodwill who do not have so much.  Here is a video about the program:

[Read more…]

Amazon sues writers of fake reviews

Who among us does not read consumer reviews before buying an online product?  Or eating out at a new restaurant?  Or choosing a service provider?

These seem to me to be a valuable dimension of the online marketplace, and they have become very important to the businesses getting reviewed.  I appreciate it when companies post an answer to a negative review, pledging to address the problems that were noted.  For the marketplace to be responsive to consumers, it needs information, and now that information–from feedback to businesses to warnings and testimonials to fellow consumers–is now instantly available.

And yet it invites fraud.  I read one estimate that 10% of  reviews are faked.  Businesses can review themselves, or cajole or even pay other people to give them a 5-star review.  Review sites such as Yelp and Trip Advisor try to police that as best they can.

Now Amazon, which posts reviews not only for books but for practically everything it sells,  is suing up to 1,000 writers who are part of a scheme to post positive reviews for $5 apiece. [Read more…]

Buying up the old-guard media

Jeff Bezos, the founder and owner of Amazon.com, has bought the Washington Post.  That was just days after the New York Times unloaded the Boston Globe to the owner of the Boston Red Sox.  But those aren’t the only surprising media acquisitions.  Newsweek, which used to belong to the Post, has been bought by a company with ties to the controversial evangelist David Jang, who started the news site The Christian Post. [Read more…]

Amazon’s same DAY delivery

We blogged earlier about how online shopping sites have a big advantage over local businesses in not having to charge sales tax.  So states and now Congress have been trying to pass laws to collect those taxes.  Amazon used to fight those efforts, but no longer, saying, in effect, throw me into that briar patch. From Farhad Manjoo in Slate:

Why would Amazon give up its precious tax advantage? This week, as part of an excellent investigative series on the firm, the Financial Times’ Barney Jopson reports that Amazon’s tax capitulation is part of a major shift in the company’s operations. Amazon’s grand strategy has been to set up distribution centers in faraway, low-cost states and then ship stuff to people in more populous, high-cost states. When I order stuff from Amazon, for instance, it gets shipped to California from one of the company’s massive warehouses in Kentucky or Nevada.

But now Amazon has a new game. Now that it has agreed to collect sales taxes, the company can legally set up warehouses right inside some of the largest metropolitan areas in the nation. Why would it want to do that? Because Amazon’s new goal is to get stuff to you immediately—as soon as a few hours after you hit Buy. . . .

It’s hard to overstate how thoroughly this move will shake up the retail industry. Same-day delivery has long been the holy grail of Internet retailers, something that dozens of startups have tried and failed to accomplish. (Remember Kozmo.com?) But Amazon is investing billions to make next-day delivery standard, and same-day delivery an option for lots of customers. If it can pull that off, the company will permanently alter how we shop. To put it more bluntly: Physical retailers will be hosed.

via Amazon same-day delivery: How the e-commerce giant will destroy local retail. – Slate Magazine.